Happy Thanksgiving from GGB; Newsletter Returns December 4

Bay State Bonanza

Gaming in Massachusetts had a good week. The state gaming commission chose the defunct Plainridge racetrack as the site of the state’s only slot parlor (l.), with gaming to be managed by Penn National Gaming. And in Revere, a second bite at the apple proved the city really wants a casinos as it approved a revamped plan by Mohegan Sun for a casino at Suffolk Downs racetrack. Mohegan must now defeat Wynn Resorts’ plans in Everett for a full casino license.

The Massachusetts Gaming Commission last week chose Penn National Gaming’s proposal for the state’s only slots parlor in the Bay State.

The commission voted 3-2 to award the license at the now defunct Plainridge harness racetrack. The vote comes more than two years after the legislature approved of the 2011 gaming expansion law. A split vote by the commission is rare; most decisions have been unanimous. The day after the vote, however, the commission did vote unanimously to formally award the license to Penn.

“Congratulations and welcome to Massachusetts,” said commission chairman Stephen Crosby.

Tim Wilmott, Penn CEO, said the facility would be a competitive site, given the fact that at least two other large full-scale casinos would be approved within the next year.

“We are not afraid of competition,” Wilmott said. “We like the fact that we are going to get a head start and be able to develop relationships with customers at our facilities for a couple of years before other competition comes in. We think the market is big enough.”

The other contenders for the license were the Cordish Cos., seeking to build in Leominster, and Raynham Park in Raynham. Local voters overwhelmingly supported all three proponents.

The 2011 gaming expansion law authorizes three casino resorts and one slots parlor with 1,250 machines. The winner of the license must pay $25 million for the license and invest a minimum of $125 million in the slots parlor, paying 49 percent of the profits to the state.

The future of Plainridge Racecourse, one of two functioning racetracks in the Bay State was largely tied in with the gaming commission’s choice of a slots parlor.

According to Billy Abdelnour, president of the New England Amateur Harness Drivers Club, interviewed by the Boston Globe, “This is a one and done deal. This will literally end, finish harness racing, because there is no one waiting in line to build a racetrack in Massachusetts.”

Plainridge’s handle, live racing wagers, went from $2.4 million in 2007 to $1.5 million in 2011.

The plight of the Massachusetts horseracing industry was one of the driving factors behind the 2011 gaming expansion law.

Converting racetracks into “racinos” has reversed the declining fortunes of a number of racetracks around the country. According to Eric Schippers, spokesman for Penn, “We don’t look at racing as an afterthought. Racing is a critical added amenity that adds to the entertainment value of our customers.”

The commission gave some signals to its votes when it released ratings of each of the three proposals. The five commissioners were assigned different aspects of the proposals to study and rate.

Penn’s plans were called a “visually attractive track and open space,” and earned the comment that it “provides an integrated design approach marrying the existing harness racing venue and simulcast with the slot parlor in a well-developed concept.”

Raynham Park’s proposal was rated “insufficient to sufficient,” in that same category, with comments that it was “essentially a large box,” and that the landscape plan didn’t provide enough details.

In the finance category Penn was given the top rating, “very good to outstanding,” compared to sufficient/very good for Raynham Park and just ahead of the Cordish Cos. It tied with the Cordish Cos. in the category of building and site design. Both proposals were rated “sufficient to very good.”

The Cordish project won out in the category of amenities.

At one point it appeared as though Plainville was not going to make the final cut when the gaming commission ruled that the owners of the track were not suitable applicants. However, Penn National, after being turned down by the town of Tewksbury, purchased the Plainville track and put together its own successful bid.

Revere Vote

Voters in Revere last week gave a resounding approval of the Mohegan Sun’s $1.3 billion casino resort project proposed for Suffolk Downs.

City voters endorsed the proposal by a margin of 63 percent yes, or 7,195-4,177, cast by 44.3 percent of registered voters. The city, which has a population of about 53,000, is economically challenged and has an unemployment rate of 7.2 percent. The city, where the first public beach in the United States opened in 1896 was a strong tourist draw in the last century, has seen hard times in recent years.

Supporters of the Suffolk Downs casino spent $3.3 million on the November and February votes, with the Mohegan Sun adding another $400,000, which, according to some estimates works out to be about $35 per voter.

Mohegan Sun Tribal Gaming Authority CEO Mitchell Etess predicted that the Massachusetts Gaming Commission would ultimately prefer his company’s proposal for the Boston Metro zone license to that of Steve Wynn’s proposal for the town of Everett.

The state’s 2011 gaming expansion law authorizes three casino resorts in three gaming zones and one slots parlor. Both the Wynn and Mohegan projects are competing for the Boston metro zone license, which will probably be awarded this May or June by the commission.

“We’re going to win this license because our application to Massachusetts is unconditional,” he said. “We are ready to go.” The Mohegan Sun’s proposal includes a casino with 4,000 slot machines and 100 table games, plus two hotels.

He was referring to the issue that the $1.6 billion Wynn proposal faces of having to do an environmental clean up of the Everett property, which was formerly the site of a Monsanto chemical plant, a process that is expected to take up to a year. That site is about three miles from the Revere site.

In the lead-up to the election, proponents and opponents lined the streets near polling places, wielding placards, while motorists honked their horns in support of one side or the other. As it turned out, the yes voters had overwhelming numbers, although the city’s clergy put up a strong anti-campaign.

The pro forces also vastly outspent the casino foes, with the Mohegan Sun funding $400,000 compared to $11,000 raised by the opposition.

Revere Mayor Dan Rizzo hailed the vote, “Today Revere said yes to Mohegan Sun. Today Revere said yes to jobs. Today Revere said yes to better schools and safer streets.”

Joseph Catricala of “Don’t Gamble Revere,” greeted the loss,

“Having two schools within 1,000 feet of a casino is scary. What is someone who has lost all their money after drinking all day capable of?” He added,  “The battle is lost but the war is not over.”

The casino developer’s host community agreement with Revere would pay the city $33 million upfront and up to $30 million annually. It would provide 4,000 permanent jobs and 2,500 construction jobs.

This was the second time that the city’s voters were asked to approve of a casino proposal. In November they approved of a similar proposal by Suffolk Downs whose footprint would have been in both Revere and East Boston. The latter’s voters turned that one down, which forced Suffolk Downs to partner with the Mohegan Sun, which will lease the land in Revere from the racetrack.

Chip Tuttle, chief operating officer for Suffolk Downs, commented, “Second chances are a great thing in life.

The Mohegans would build on 42 acres that are currently horse stables. The 170,000 square foot casino would have 4,000 slot machines, plus 1,000 gaming tables. There would be two hotels with a total of 500 rooms, restaurants and retail shopping.

The future of Suffolk Downs’s racetrack as a viable horseracing facility largely depends on whether the casino is built. The money that the Mohegans would pay for the lease of the property would allow the racetrack to invest to create a competitive racetrack comparable to Saratoga Race Course in New York.

According to Tuttle, quoted by the Boston Globe, “We haven’t really been able to invest much in the racing facility since 1992, but racing has a latent market here. For years, the Boston area is always one of the highest rated television markets for the Kentucky Derby and the Belmont Stakes and big races on TV.”

Operating losses at Suffolk Downs are estimated to be as much as $26.4 million over the last five years and the amount wagered on live races (the handle) has declined from, $27.6 million in 2000 to $6.5 million in 2012.

In Palmer, where the Mohegans lost a host community vote in November, some former supporters of the tribe who believe it didn’t try hard enough to win that vote, offered some advice to the people in Revere after the vote. Palmer town councilor Paul Burns told 22News, “Will they back up their commitment? Let’s not forget in Palmer, they had a commitment to have an exclusive agreement with the landowner in Palmer. And instead of maintaining that commitment, they broke it unilaterally, and left to go compete in Revere before the results in Palmer were really well-known.”

Meanwhile Massachusetts Gaming Commission Stephen Crosby is largely dismissing criticism of the commission’s expenditures during its first 20 months of existence.

The criticism arose after the Boston Business Journal did an investigation based on the commission’s reimbursement reports.

During that period the commission’s staff have spent $85,000 on air travel, $61,000 on hotels and $37,000 on meals.   It spent a total of $15 million. Many of the meals were three times that rate the state allows for per diem reimbursements. Each meeting the commission has held has included a $1,600 catering bill. The commission’s staff also spent about $20,000 in trips to Las Vegas and other locations in Asia and Europe.

Crosby told CBS Boston, “We need to be more careful. We are in the public eye and appropriately so.” But he supported the expenses, “This is very much compatible with the norms of normal business life, there are very few things outside the norm of what you do when you travel and everybody does when they travel.”

However former state inspector general Gregory Sullivan criticized the high living of Crosby and his associates. “I think that he is acting like an elite in government, that somehow he stands above the rest.”

In a separate but related development, the commission has decided to take Attorney General Martha Coakley up on her offer to help write consumer regulations to protect casinos from putting liens on the homes of gamblers who borrow too much money and are unable to pay it back.

The development came in the wake of newspaper articles that chronicled the debt collecting habits of the Foxwoods and Mohegan Sun casinos, both of which are applicants for casino licenses in the Golden State.

Meanwhile, the commission voted to deny the request of the Eastern States Exposition (the Big E), to be designed as an “Impacted Live Entertainment Venue,” and be compensated by the casino that MGM Resorts wants to build in Springfield.

The commission turned down the request by a vote of 3-2. The vote happened after MGM agreed to not put on live concerts during the fair’s 17-day run each year.

Repeal the Law

Opponents of gambling in the Bay State took their loss in Revere philosophically, vowing to fight on, and pinning much of their hopes on the November election when they hope an initiative will be on the ballot that would give voters to option of repealing the gaming expansion law.

Having collected 68,000 signatures to put the measure on the ballot, the anti-casino forces, Repeal the Casino Deal, must now persuade the Supreme Judicial Court to rule that their measure is constitutional. Attorney General Martha Coakley ruled that it is not constitutional last year, but allowed the appeal to go forward to the court.

The city of Springfield, the state’s third largest city, where voters by 58 percent approved of MGM Resorts International’s casino proposal, have joined in this legal action, but on the other side. Mayor Domenic Sarno and nine other city residents last week filed a motion with the court.

The city’s solicitor, Edward Piluka, issued a statement, “Our efforts are aimed solely at assuring that the SJC gets the Springfield perspective as to the legality of the initiative petition.”

Independent gubernatorial candidate Jeff McCormick, who is running to be two-term Governor Deval Patrick’s successor, says he supports repealing the casino law and will vote for the measure.